Question

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent. Cost Machine Hours March $3,100 15,000 April 2,700 10,000 May 2,900 12,000 June 3,600 18,000 a. $0.67 b. $10.00 c. $0.63 d. $0.11

Answer 1

Answer:

The option d is correct.

Explanation:

The high low method shows the difference between the high and low cost of a particular thing. In the given question, the high cost is $3,600 and the low cost is $2,700 whereas the high machine hour is 18000 and low machine hour is 10,000.

Now, the formula for high low method is calculated. It is shown below:

High low method =  (High cost - Low cost) ÷ (High machine hours - Low machine hours)

= ($3,600 - $2,700) ÷ (18000 - 10,000)

= 900 ÷ 8000

= 0.11

Thus, the option d is correct.